Indian investors gain from Nvidia’s historic share surge

The breakneck rally in US-based chipmaker Nvidia’s share has made Indian investors richer with Rs 1,699 crore invested via the mutual fund route alone, shows data.

Nvidia’s stock surged 16 percent on February 22, as the company surpassed Wall Street predictions after announcing its fiscal fourth-quarter revenue of $22.10 billion, a 265 percent year-on-year (YoY) growth. Net income also saw a 769 percent surge in the October-December period.

The stock has grabbed the limelight among global investors as the company reached a market capitalisation of $2 trillion, after more than doubling in the last one year.

The share price of Nvidia closed at $788.17 apiece on Nasdaq on February 23, rising 235.38 percent in the last one year.

The mutual fund route
As per a report by Fisdom Research, as of January end, Indian mutual funds had invested Rs 1,699 crore in the company.

Notably, only one fund house in India, Axis Mutual Fund, has active investment in the company via two schemes. Axis Special Situations Fund has Rs 8.4 crore, while Axis Growth Opportunities Fund has exposure to the tune of Rs 118.5 crore. The overall exposure in the two schemes to Nvidia is up to 1 percent each.

Among non-broad-based passive funds, Motilal Oswal Nasdaq 100 Exchange-Traded Fund (ETF) has Rs 326 crore invested in the stock, followed by Mirae Asset NYSE FANG+ ETF (Rs 226 crore), Kotak NASDAQ 100 FoF (Rs 143 crore) and Motilal Oswal S&P 500 Index Fund (Rs 113 crore).

In terms of broad-based passive mutual fund schemes, Franklin India Feeder – Franklin US Opportunities Fund has an exposure of Rs 200.5 crore to the stock, followed by Edelweiss US Technology Equity FoF (Rs 88.4 crore) and PGIM India Global Equity Opportunities Fund (Rs 81.7 crore), showed report by Fisdom research.

A passive fund tracks the returns of the benchmark index, while active investing is a hands-on approach where the fund manager is fully involved in the investment process.

In terms of impact from the rally in Nvidia stock on February 22, Mirae Asset NYSE FANG+ ETF saw the biggest push in its net asset value (NAV), at 1.9 percent. Other schemes, such as Mirae Asset S&P 500 Top 50 ETF, Invesco EQQQ NASDAQ-100 UCITS ETF, PGIM India Global Equity Opp Fund and Franklin India Feeder – Franklin US Opportunities Fund, saw up to 1 percent impact from the one-day change in Nvidia’s price on the schemes’ NAV.

The direct route
On top of mutual funds, those investing directly on stock markets are also getting attracted to the company’s stock rally.

As per Vested Finance, an overseas investment platform by volume, Nvidia is the second-most popular stock (after Tesla) on the platform over the past six months with trading volumes of more than $25 million.

“Volumes have doubled in February against last month. Last week, Nvidia was the number 1 trending stock, in terms of the number of investors and volumes. The company is now the sixth most widely held stock on the platform, while it was not even in the top 10 a year ago. This shows the increasing awareness of the potential of artificial intelligence in the years to come,” says Viram Shah, CEO, Vested Finance.

As per Shah, while direct investing in the US stocks is picking up pace in the recent months, it is yet to reach the peak of 2021.

Why the rally in Nvidia?
Artificial intelligence or AI has been the talk of the town and Nvidia’s AI GPUs are getting much of the attention, thanks to the ongoing generative AI boom.

Major technology majors such as Open AI, Google and Twitter are betting big on AI, which means it is building a new ecosystem. This requires processing of huge amounts of data, which needs data centres and cloud capacity, which, in turn, require semiconductor chips.

“In the last few years, there were three possibilities for AI chips, graphics processing unit (GPUs), Field Programmable Gate Arrays (FPGAs) and Application-Specific Integrated Circuits (ASICs). But GPUs have won the race so far. Meanwhile, Google, Amazon, Microsoft and Apple are also working on their chip technologies. But today, Nvidia GPU is the gold standard, and they are expected to have an advantage over the next few years. This has led to an extraordinary growth rate in revenue and earnings, which is again going to be there for a few years, till competition starts getting stronger, in the next two to five years,” said Vikas Gupta, Chief Executive Officer and Chief Investment Strategist at OmniScience Capital.

However, Gupta warned that after the recent rally, Nvidia might not be a great company to have in a portfolio as the stock has already seen quite a decent run- up.

OmniScience Capital has a fund called Omniscience AIoT (Artificial Intelligence-Internet of Things) that invests in disruptive technologies such as AI, IoT, Cloud, 5G, Big Data, Robotics, Analytics and Cybersecurity, among others.

“It is one of the most important companies that we don’t have in our portfolio. However, we are keeping a close eye and we would like to invest in the company but only at the right time and price,” said Gupta. Moneycontrol